A restrictive covenant is a clause in a contract or a property deed that limits what you can do, either with land you own or with your career after leaving a job. The term covers two very different worlds: real estate rules recorded against a property, and employment clauses like non-competes and non-solicitation agreements. Both are enforceable in principle, but courts regularly refuse to enforce ones they consider too broad, and the specific rules vary by state.
Restrictive Covenants on Property
In real estate, these clauses usually appear as Covenants, Conditions, and Restrictions, known as CC&Rs. They are recorded in the county clerk’s office and enforced by a homeowners association or the developer of the community. A CC&R might limit fence heights, dictate exterior paint colors, keep certain vehicles out of driveways, or prohibit running a business from a residential lot.
The important feature is that these restrictions “run with the land.” Because they are in the public record, they bind every future owner, not just the person who originally agreed to them. For a covenant to follow the land this way, it generally has to be in writing, the original parties must have intended it to bind successors, and the restriction has to relate to the use or enjoyment of the property.
Buyers normally find these limitations during a title search before closing. If you skip that step, you still own the property subject to whatever is already recorded, whether you read it or not.
Restrictive Covenants in Employment
In the employment context, “restrictive covenant” is a catch-all for clauses that limit what a worker can do after leaving. The most common are:
- Non-compete agreements, which bar you from working for a direct competitor or starting a rival business for a set period.
- Non-solicitation agreements, which bar you from recruiting former colleagues or contacting former clients.
- Non-disclosure agreements, which protect trade secrets and confidential information. NDAs are a related but distinct category and are generally easier for employers to enforce.
These clauses turn up in offer letters, employment contracts, severance packages, and partnership agreements. The stated purpose is to protect the employer’s investment in proprietary information, client relationships, and specialized training. The practical effect is that they can limit your ability to earn a living in your field, which is why courts scrutinize them far more closely than property covenants.
Where Non-Competes Are Banned or Capped
There is no federal ban on non-competes. The FTC issued a final rule in April 2024 that would have made enforcing most non-competes an unfair method of competition, but a federal district court set the rule aside in August 2024, finding the FTC lacked authority to issue such a sweeping regulation.1Justia Law. Ryan LLC v. Federal Trade Commission, No. 3:2024cv00986 The FTC dropped its appeals and accepted the ruling in September 2025.2Federal Trade Commission. Federal Trade Commission Files to Accede to Vacatur of Non-Compete Clause Rule
That leaves a state-by-state patchwork. Six states ban non-competes outright: California, Minnesota, Montana, North Dakota, Oklahoma, and Wyoming. California’s ban has been in place for over 150 years.
Several other states set salary floors below which a non-compete cannot apply. The thresholds range from roughly $30,000 to over $160,000 depending on the state. Colorado requires an employee to earn at least $130,014, Illinois sets the floor at $75,000, and Washington’s threshold is approximately $126,859 for 2026.
A growing number of states also carve out specific professions. Physicians and other healthcare workers face special rules in many jurisdictions, including geographic caps of five to thirty miles, maximum durations of one to two years, and in some cases mandatory buyout provisions that limit the cost of leaving.
How Courts Decide Whether a Covenant Is Enforceable
Even where non-competes are allowed, they only hold up if they are reasonable. Courts look at three dimensions:
- Duration. One to two years is generally considered reasonable for an employment non-compete. Longer restrictions face increasing skepticism. Property covenants can last indefinitely because they attach to the land rather than to a person’s livelihood.
- Geographic scope. The restricted area has to match where the employer actually operates. A nationwide ban makes no sense for a business that serves one metro area.
- Scope of activity. The restriction has to be tied to the activities that would genuinely harm the employer’s protected interest. Banning you from an entire industry when only a specific product line is at issue is the kind of overreach courts reject.
What happens when a covenant fails one of these tests depends on your state. Some states take an all-or-nothing approach: if any part is unreasonable, the whole covenant is void. Others apply the blue-pencil doctrine, where a judge can strike offending words and enforce whatever remains, provided it still makes grammatical sense. A third group lets courts rewrite the restriction to make it reasonable and then enforce the revised version. Nevada and Arkansas actually require courts to reform overbroad non-competes rather than void them.
Knowing which approach your state follows is the single biggest factor in predicting whether a non-compete will stick.
What Makes a Covenant Binding in the First Place
Like any contract, a restrictive covenant needs consideration, meaning something of value exchanged between the parties. How that requirement plays out depends on the setting.
Employment
When a non-compete is part of your initial job offer, the job itself is the consideration. You trade future freedom for employment, and courts in virtually every state accept that.
It gets more complicated when an employer asks an existing employee to sign a non-compete partway through the job. In most states, continued employment at an at-will job counts as sufficient consideration, on the theory that the employer could fire you at any time and agreeing not to has value. Roughly a dozen states disagree. Texas, Pennsylvania, Oregon, Massachusetts, and Washington are among those that require independent consideration, meaning a raise, a bonus, a promotion, or some other tangible benefit beyond simply keeping your job.
This catches people constantly. An employer in one of those states hands you a non-compete six months in with nothing attached, and you sign because you assume you have to. That signature may mean nothing. If you later challenge the agreement, the lack of independent consideration can void it entirely.
Property
Real estate handles consideration differently because the covenant is built into the deed. When you buy a home subject to CC&Rs, the purchase itself is the consideration. You pay for the property and accept its restrictions as a package. Because the restrictions are recorded publicly before closing, the law treats you as being on notice regardless of whether you read them. That makes property covenants much harder to challenge on consideration grounds.
Covenants That Are Void No Matter What
Some restrictive covenants are flatly illegal. Racially restrictive covenants, which barred the sale or rental of property to people of certain races, ethnicities, or religions, were common across the United States through the mid-twentieth century. The Supreme Court held in 1948 that judicial enforcement of these covenants violates the Equal Protection Clause of the Fourteenth Amendment: the covenants themselves were created by private parties, but a state court enforcing them is state action.3Justia Law. Shelley v. Kraemer, 334 U.S. 1 (1948) The Fair Housing Act of 1968 went further, making it illegal to include discriminatory terms in property transactions based on race, color, religion, sex, national origin, familial status, or disability.
Plenty of older deeds still contain this language. The words have no legal force, but they remain visible in the public record. A growing number of states have created processes that let property owners record a certificate striking the discriminatory language without needing a court order or an attorney.
What Happens If You Violate a Covenant
Breaking a restrictive covenant exposes you to legal action. The remedies available to the other side depend on the type of covenant and the harm caused.
The most common remedy is an injunction, a court order directing you to stop the prohibited activity. In an employment case, that can mean a judge ordering you to quit your new job at a competitor. In a property case, it can mean halting construction that violates a setback or tearing down a structure already built. Courts grant injunctions when monetary damages alone would not fix the problem, which is often true because the harm from a covenant breach tends to be ongoing.
When the injury can be measured in dollars, courts award monetary damages. That might include an employer’s lost profits from a salesperson who took clients to a competitor, or the decline in neighboring property values caused by a violation. Some agreements include liquidated damages clauses, which set a penalty amount in advance. These are only enforceable if the figure reasonably approximates the actual or anticipated loss and the true damages would be hard to calculate. A clause designed to punish rather than compensate is treated as an unenforceable penalty.
Courts sometimes award damages instead of an injunction when the harm is small, calculable, and an injunction would be disproportionately harsh on the person who breached. That discretion prevents a minor technical violation from leading to a demolition order or career destruction.
Getting Out From Under a Restrictive Covenant
The path to ending a covenant depends on whether it attaches to a job or to land.
Employment Covenants
Most employment non-competes simply expire. The restriction runs for its stated duration after you leave, and then it is over. If your agreement has a one-year non-compete and you have been gone fourteen months, you are free. No paperwork, no filing, no release needed.
If you want a formal release before the restriction expires, perhaps because a new employer requires written confirmation, you need your former employer to sign one voluntarily. Their legal department may take several weeks to review and process the request, and they are under no obligation to agree.
If you believe the covenant is unenforceable because it is overbroad, lacks consideration, or runs into a state ban, you can challenge it in court. Do that before you take the new position, not after your former employer has already filed for an injunction. A declaratory judgment action asks the court to rule that the covenant does not bind you, which removes the uncertainty before you move.
Property Covenants
Removing a property covenant is more involved because the restriction is embedded in the public land records. Start by locating the original deed or CC&R document that created it. That document contains the exact restriction language, any expiration dates, and the amendment procedure if one exists. You will need the legal description of the property, meaning lot number, block number, and subdivision name, along with the recording reference showing where the original document was filed.
If the restriction has a built-in sunset clause, you may only need to record a release document with the county recorder’s office to clear the title. Recording fees vary by jurisdiction but generally fall under $100. If the covenant was imposed by an HOA and has no expiration, removing it typically requires a supermajority vote of the membership, often two-thirds or more, followed by recording the amendment.
When neither expiration nor a membership vote can resolve the issue, a quiet title action is the remaining option. This is a lawsuit asking a court to declare the covenant unenforceable and remove it from the title. These actions are used when a restriction is outdated, its original purpose has been abandoned, or neighborhood conditions have changed so fundamentally that enforcing the covenant no longer makes sense. Legal fees typically run between $1,500 and $5,000, and the case can take anywhere from a month to over a year, depending on whether anyone contests it.